What Bob Iger, Rupert Murdoch Made in 2019 – Variety

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Media chieftains don’t endure from low vanity. Business titans together with Bob Iger, Reed Hastings and Rupert Murdoch most likely want huge egos to imagine they’re entitled to make way over most CEOs at equally sized firms — and way more for 12 months of labor than a mean worker may make in a number of lifetimes.

It could take about 410 years for a typical worker at AT&T, Comcast, Discovery, Disney, Fox, Lionsgate, Netflix or ViacomCBS to match the $37.6 million median dimension of the packages paid to every CEO final yr, in response to their most up-to-date proxies.

However the interval of outsize, some may even say gluttonous, compensation could also be over — at the very least for now. The COVID-19 disaster and ensuing recession have led to layoffs or furloughs at firms together with Comcast, Disney and ViacomCBS, and intensified scrutiny into how their boards reward their leaders.

“Change is coming,” predicts Rosanna Landis Weaver, program supervisor of shareholder advocacy group As You Sow. “There’s a number of populist outrage over this, and this stage of inequality is destabilizing.”

Some have made a present of shared sacrifice by forgoing their salaries, however not the bonuses and inventory awards that account for the majority of their compensation.

“The message that they’re sending is that ‘We’re all in this collectively,’” says Robin Ferracone, CEO of Farient Advisors, a efficiency advisory and strategic compensation agency. “It’s not going to avoid wasting the businesses that a lot cash. Nevertheless it’s an necessary step when persons are dropping their jobs.”

Will this sense of solidarity final? Maybe. The photographs of extravagance that emerge from Variety’s annual deep-dive take a look at CEO compensation may seem to be snapshots from a time passed by if COVID-19 stay-at-home mandates speed up customers’ shift from theatrical motion pictures and cable tv programming bundles to cheaper — but additionally lower-margin and riskier — streaming companies from giants led by Netflix.

Charles Elson, director of the College of Delaware’s John L. Weinberg Middle for Company Governance, is skeptical. “Firms might emerge from this and shrink their workforces,” he says. “However by some means I believe media govt salaries will return to regular.”

To make certain, media boards have a monitor file of rewarding CEOs in dangerous instances in addition to good. Investor advisory advisor Institutional Shareholder Companies gave all the firms Variety tracks — besides AT&T and Disney — the bottom attainable rating for what it calls “governance danger.”

That’s due in half to the dual-class shareholder system on the likes of ViacomCBS and Comcast, which give controlling shareholders Shari Redstone and Brian Roberts nearly absolute authority. Company boards, composed of loyalists, typically rubber-stamp exorbitant pay packages and be sure that bonus targets stay inside attain.

That creates a skewed compensation image for different firms, together with Disney and AT&T, that don’t have dual-class management. They really feel aggressive strain to benchmark their executives’ pay towards their rivals’.

“Media companies stay in a Lake Wobegon world,” says Lawrence Mishel, distinguished fellow on the Financial Coverage Institute, referencing the fictional city created by Garrison Keillor the place all the youngsters are distinctive. “Everybody believes their executives are above common and that their pay ought to be above common.”

However the extensively reported top-line CEO wage numbers present an incomplete, and sometimes distorted, image of an organization’s pay and priorities. Take the 2019 compensation for our eight Huge Media chiefs. The official numbers add as much as $285.7 million.

That large whole ignores inventory holdings. Hastings’ Netflix inventory is price $4.1 billion and has appreciated $1.1 billion because the starting of 2020 — dwarfing the $38.6 million he obtained in 2019 compensation. And plenty of CEOs make further cash elsewhere; Fox’s Rupert Murdoch collected $5 million at Information Corp., which he additionally controls.

The pay packages are justified by claiming they’re wanted to retain their prime expertise. Nonetheless, CEOs of those public companies are hardly ever recruited by rivals, preferring to advertise from inside. “They’re not Lebron James, who can take his abilities wherever and enhance a group,” notes “The CEO Pay Machine” writer Steven Clifford.

Media firms say the lopsided compensation displays CEOs’ efficiency — particularly when the inventory worth rises. However the nation’s largest firms now not imagine that’s the suitable yardstick for his or her achievements. In August, Enterprise Roundtable introduced a shocking philosophical shift when it stated that firms owe loyalty to clients, staff, suppliers and communities in addition to shareholders.

To mirror that, we’ve added assessments of every firm from JUST Capital — a nonpartisan nonprofit that advocates stakeholder capitalism, which considers company insurance policies affecting employees, clients, communities, the setting and shareholders.

The brand new mild casts unflattering shadows on a few of the chiefs in our group. Take Iger. The Disney govt chairman’s $47.5 million bundle made him our highest-paid chief for 2019. It could take 911 years for common Disney staff — a gaggle that features low paid theme park employees — to make as a lot as he did final yr. However his firm ranked 858 among the many 922 that JUST Capital analyzed in paying employees a residing wage, 893 in charging honest costs for its services or products and 908 in paying the CEO pretty in relation to employees. Fox, which paid Rupert Murdoch $42.2 million in 2019, ranked 882 amongst all firms in the range and inclusiveness of its office. And Comcast, the place Brian Roberts made $36.Four million, was 916 in customer support. One way or the other these dismal assessments weren’t mirrored in their take-home pay.


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Courtesy of AT&T

AT&T

Randall Stephenson, Chairman, CEO, President
2019 Stephenson compensation:
$32.0M/+10.0%

John Stankey, President, COO
2019 Stankey compensation: $22.5M/+35.8%

Median worker compensation: $98,630
Stephenson/Stankey pay ratio to median worker: 325/228

2019 whole shareholder return: +45.4%

Board: 10 males/Three girls

Common age of board members: 63

2019 looks as if a lifetime in the past for AT&T. Shares in the proprietor of WarnerMedia and DirecTV appreciated 45.6% in the 12 months ending in December — then misplaced virtually all these beneficial properties in the COVID-infected first quarter of 2020.

However the calendar yr is what counted in the compensation calculations for CEO Stephenson and chief working officer Stankey — who oversees WarnerMedia and can exchange Stephenson in July.

The outcomes masks what a turbulent interval it was for the world’s most indebted firm. The telco needed to exchange the heads of Warner Bros., HBO and Turner in 2019. Stephenson’s and Stankey’s careers additionally appeared endangered when billionaire Paul Singer’s activist hedge fund Elliott Administration Corp. purchased a significant stake in AT&T and chastised it for failing to reverse the two-year collapse in its inventory worth. A truce was reached after AT&T promised to spend billions on inventory repurchases — a vow it broke this yr when the economic system tanked.

The deal bolstered the inventory, and Stephenson’s bonus. Stankey benefited much more from the board’s determination to benchmark his compensation to what it diplomatically calls “the distinctive pay practices in the media and leisure {industry}” — together with huge spenders Comcast, CBS, AMC Networks and Discovery.

In June 2018, when AT&T purchased Time Warner, administrators boosted Stankey’s short-term incentive bonus goal by 252% to $7.Four million. The upper goal was in impact for all of 2019 versus half of 2018. The board additionally figured that he deserved 102% of the goal, up from 88%. That greater than made up for the lack of the $2 million “merger completion bonus” the corporate gave him in 2018.


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Courtesy of Comcast

Comcast

Brian Roberts, Chairman, CEO, Comcast
2019 Roberts compensation:
$36.4M/+3.8%

Stephen Burke, Chairman, NBCUniversal
2019 Burke compensation:
$42.6M/+6.5%

Median worker compensation: $78,869

Roberts/Burke pay ratio to median worker: 461/539

2019 whole shareholder return: +34.7%

Board: 7 males/Three girls

Common age of board members: 63

Sorry, Comcast execs, however considered one of your most extravagant and controversial advantages is historical past.

The cable and broadband big that owns NBCUniversal stopped guaranteeing a risk-free 9% rate of interest — 12% for CEO Roberts — on earnings stashed in the corporate’s Deferred Compensation Plan.

The board says it bent to a “few” shareholders who objected to a profit that pays execs even when the inventory worth declines. Administrators say they nonetheless “strongly imagine” the assured funds entice and maintain expertise.

Maybe. Then why did Roberts make $4.7 million of his $36.Four million bundle final yr from the plan? He’s presumably the world’s very unlikely flight danger: He controls a 3rd of Comcast’s voting shares — and its Articles of Incorporation say that he have to be chairman, CEO and president “if he’s prepared and obtainable to serve.” The CEO just lately introduced that he’ll donate his $3.2 million wage to COVID-19 reduction efforts, and that the corporate is offering $500 million to help staff who’ve been impacted by the well being disaster.

The $4.5 million from the Deferred Compensation Plan that Comcast contributed to NBCUniversal chairman Burke’s $42.6 million bundle didn’t maintain him from saying that he’ll retire in August. He ended 2019 with almost $202 million in the fund. Roberts and different Comcast executives received’t really feel a lot ache from the change in the plan. Execs can park their financial savings in extra typical funds that administrators say “will supply above-market curiosity.”

Administrators favored Roberts’ work in 2019. They awarded him a $10 million bonus, barely greater than the goal.

The board stays 70% male, an enchancment from final yr, as a result of another lady, former Vibrant Home Networks and Time Warner Cable govt Nomi Bergman, was tapped as a director.


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Courtesy of Discovery Communication

Discovery

David Zaslav President, CEO
2019 Zaslav compensation:
$45.8M/-64.6%

Median worker compensation: $79,343

Zaslav pay ratio to median worker: 578

2019 Complete shareholder return: +32.4%

Board: 11 males/1 girls

Common age of board members: 68

The Discovery chief’s $45.Eight million bundle for 2019 seems to be a giant drop from 2018’s eye-popping $129.5 million. Nevertheless it’s a 29% improve should you ignore the one-time accounting worth of the contract-renewal bonus he obtained final yr — which the corporate stated was higher for comparability functions.

Discovery decided that it might take 578 years for a mean worker to match what Zaslav made in 2019. It computed that ratio with a determine for common worker earnings that’s 7.4% decrease than it was in 2018.

Why such a giant distinction? This time Discovery included staff it picked up in March 2018 when it purchased Scripps Networks. They had been disregarded of final yr’s calculation.

The CEO-to-employee ratio is also excessive as a result of a provision from Zaslav’s 2018 contract kicked in, elevating the goal for his annual Non-Fairness Incentive Plan Awards by 144% to $22 million from $9 million.

The board awarded him 99% of the brand new goal. The corporate met all of its monetary targets, it decided. It additionally figured he met 97.9% of his subjective qualitative targets, which had been based mostly on constructing a direct-to-consumer enterprise, driving “value synergy, income and free money movement” and integrating Scripps Networks.

The 12-member board solely has one lady. That imbalance is partly attributable to the governance construction. Three seats are assigned to every of 4 teams of shareholders together with Advance/Newhouse and John Malone’s Liberty Media. That’s additionally why Discovery’s board is by far the oldest in our group, with 4 members over 74.


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Heidi Gutman/Disney/ABC

Disney

Robert Iger, Government Chairman
2019 Iger compensation:
$47.5M/-27.6%

Median worker compensation: $52,184

Iger pay ratio to median worker: 911

2019 whole shareholder return: +13.4%

Board: 5 males/Four girls

Common age of board members: 60

Disney and Iger type of listened to the various shareholders who say the corporate pays him an excessive amount of. Final yr he agreed to trim $5 million from the goal for his annual long-term incentive award, $Eight million from his goal bonus and the $5 million bonus his 2017 contract renewal included if he stayed in his job via July 2, 2019.

That decreased his whole to $47.5 million, making him the highest-paid CEO in our group. On the March shareholder assembly, these holding 46% of Disney shares nonetheless opposed an advisory decision to approve the compensation plan.

Even with the cuts, 2019 was Iger’s second-most-lucrative yr since 2008, when he benefited from a contract renewal bonus. His newest bundle would have been his highest since 2008 had the board not given him a $26.Three million bonus in 2018 for making the cope with Fox.

Iger handed the CEO title to former parks chief Bob Chapek on Feb. 25. He turned govt chairman however remained the CEO’s boss — with no obvious lower in pay.

A month later, Iger agreed to quickly forgo his $Three million base wage, and Chapek took a 50% lower in his $2.5 million wage. The brand new CEO’s three-year contract additionally consists of an annual bonus focused at $7.5 million and a long-term incentive award focused at “not lower than $15 million.”

Iger normally leaps previous the targets the board units for his bonus. Final yr he made almost $21.Eight million from a bonus that’s focused at $12 million. Administrators gave him 173% of the a part of his bonus tied to Disney’s monetary efficiency and 200% of his subjective qualitative targets.

Administrators stated Iger had “a yr of extraordinary accomplishment.” They gave him credit score for, amongst different issues, the Fox deal, the launch of Disney Plus and hit motion pictures together with “Avengers: Endgame” and “Captain Marvel.”

His industry-leading bundle made him 911 instances extra priceless than a typical Disney worker. That group averaged $52,184 in pay, bonus and firm contribution to medical insurance — up 13% versus 2018, which the proxy attributes to “the broad-based wage improve the Firm offered in 2019.” In 2018, a union-commissioned Financial Roundtable survey of Disneyland staff discovered that 85% made lower than $15 an hour.

On the time of Disney’s annual assembly, the board maintained its 5-to-Four ratio of males to girls. That modified to six to Four this yr when Chapek joined.


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Courtesy of Fox

Fox

Rupert Murdoch, Government Chairman
2019 Murdoch compensation:
$42.2M/-14.4%

Median worker compensation: unreported

Murdoch pay ratio to median worker: NA

2019 whole shareholder return: NA

Board: 6 males/1 lady

Common age of board members: 61

Fox beloved Rupert Murdoch for his $71 billion sale of its struggling studio and several other TV belongings virtually as a lot as Disney beloved Iger for purchasing them.

Fox Corp., the slimmed-down successor to 21st Century Fox, awarded Murdoch $42.2 million for the fiscal yr that ended in June, together with $15.1 million in particular inventory and choice awards tied to the Disney deal.

Though the full dropped from 2018, it’s his second-highest compensation bundle in at the very least a decade. Murdoch “imbues the Firm along with his entrepreneurial zeal and supplies the board with robust operational management and broad strategic imaginative and prescient,” administrators gush in the most recent proxy.

His son, CEO Lachlan Murdoch, ended the yr with $42.1 million, together with $28.1 million in transaction-related compensation.

Rupert Murdoch’s annual wage dropped to $5 million from $7.1 million. His bonus is focused at $6 million and may go as excessive as $12 million — down from a most of $21 million.

However Fox stored the annual Shareholder Alignment Plan award as an “further incentive” for executives. That appears to imply that Fox’s largest shareholder will acquire an annual inventory cost focused at $7 million to make sure he takes care of his personal pursuits.

Lachlan’s wage stays at $Three million. The board set a $6 million goal for his bonus, which may go as excessive as $12 million — down from $16 million at 21st Century Fox. His SAP award is focused at $11 million.

The execs agreed in April to surrender their base salaries for 5 months ending in September.

The board of the proprietor of Fox Information says {that a} “numerous and inclusive office just isn’t merely a technique or enterprise goal; it’s basically woven in the material of the Firm.”

And but, the Murdochs discovered only one lady for the seven-member physique.


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Courtesy of Lionsgate

Lionsgate

Jon Feltheimer, CEO
2019 Feltheimer compensation:
$6.6M/-54.1%

Michael Burns, Vice Chairman
2019 Burns compensation:
$5.2M/-42.3%

Median worker compensation: $117,628

Feltheimer/Burns pay ratio to median worker: 56/44

2019 Complete shareholder return: -37.9%

Board: 10 males/Three girls

Common age of board members: 61

In 2017, Lionsgate turned down a suggestion from Hasbro that will have offered the studio behind “The Starvation Video games” to the toymaker for $40 a share, believing that it undervalued the corporate. That call doesn’t look so nice in retrospect on condition that Lionsgate’s inventory at the moment trades at lower than $8.

It could be simple accountable a few of the downturn on COVID-19, however even earlier than coronavirus turned the world the other way up, Lionsgate’s inventory was getting pummeled. Traders imagine the corporate doesn’t have the franchises to compete with rivals equivalent to Disney, and so they’re additionally cautious of the $2.7 billion in debt it piled on 4 years in the past to purchase cable channel Starz.

CEO Feltheimer did see his compensation packages fall considerably in 2019, down greater than 50%, however that’s partly because of a contract extension he signed in 2017 front-loaded with inventory awards. Regardless of the lackluster efficiency, Feltheimer and vice chairman Burns each obtained greater than 80% of their attainable bonuses, amounting to $3.1 million in money and $2.2 million, respectively, in addition to doubtlessly tens of millions extra in fairness awards. The corporate praised the 2 for his or her “nice management” in overseeing strategic initiatives that may “drive future development.”


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Courtesy of Netflix

Netflix

Reed Hastings, Chairman, CEO
2019 Hastings compensation:
$38.6M/+6.9%

Median worker compensation: $202,931

Hastings pay ratio to median worker: 190

2019 whole shareholder return: +20.8%

Board: 7 males/Four girls

Common age of board members: 56

Netflix dances to its personal drummer on the subject of compensation. And it needed to barnstorm huge traders’ convention rooms final yr after it narrowly misplaced an advisory say-on-pay vote — making it amongst simply 3% of U.S. companies that did not win shareholder help for govt compensation.

Stockholders objected to its uncommon determination to eschew so-called performance-based bonuses tied to how properly executives and their firms meet predetermined annual targets. As an alternative, Netflix computes compensation based mostly on how a lot it’s prepared to pay, how a lot it might value to interchange the individual and the way a lot the individual may anticipate to be paid elsewhere. The corporate calculates its supply — and leaves it to the worker to determine how a lot ought to come from money or inventory choices.

Final yr, 97% of CEO Hastings’ $38.6 million bundle got here from choices. Chief content material officer Ted Sarandos guess about 48% of his $34.7 million on the inventory.

Opponents say the coverage rewards administration even in dangerous years. The corporate counters that it attracts expertise and promotes long-term planning. The inventory worth should admire 40%, it says, for choices to pay greater than money.

So did Netflix scrap the unpopular coverage? In fact not. However “we have now tried to raised describe our program,” the proxy says. The Compensation Committee additionally says it’s “conscious” of final yr’s vote.

Nonetheless, it piled $2 million onto Hastings’ whole based mostly on “his accomplishments in creating and evolving the enterprise technique,” the corporate’s efficiency and “his skill to draw and retain senior administration.”

One different change: Throughout the yr, Netflix ended its deal to lease two jets that Hastings owns. Because of this, he simply made $508,438 from the association — down from $1.2 million in 2018 — though he additionally obtained $465,637 to reimburse him for “private use of firm plane.”

Substantial as these sums are to most individuals, they’re tiny in contrast with Hastings’ wealth from the 9.Three million Netflix shares he owned on the finish of 2019, equal to about 2.1% of the corporate. They’re price about $4.1 billion.

Netflix’s common worker made $202,335 final yr. Firms compute the quantity in another way, so comparisons are unreliable. Nonetheless, this stands out as the very best among the many firms we monitor.

Netflix additionally has the youngest board in our group. To assist forestall a hostile takeover, administrators serve staggered, three-year phrases. Three are up for election this yr, together with Hastings.


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Celeste Sloman/Variety

ViacomCBS

Robert Bakish, President, CEO
2019 Bakish compensation:
$36.6M/+83.3% (estimated pay determine)

Median worker compensation: $104,791

Bakish pay ratio to median worker: 349

2019 whole shareholder return: -5.4%

Board: 6 males/7 girls

Common age of board members: 63

ViacomCBS’ first proxy following CBS’ Dec. Four acquisition of Viacom is probably the most artistic of this yr’s pack.

Think about the imaginative manner it calculated CEO Bakish’s compensation versus the median pay for a ViacomCBS worker — which it reported at 349-to-1.

It arrived at that ratio in a roundabout manner. ViacomCBS’ official report stated he made $8.Four million for the roughly 4 weeks that he ran the brand new firm.

On prime of that, Viacom stated Bakish made $24.Four million for the 12 month interval that ended on Sept. 30. ViacomCBS’ quantity lops off roughly 1 / 4 of that as a result of it was earned previous to its official fiscal yr. The corporate figured that Bakish would have been eligible to obtain $60.9 million in severance and different funds if he had not change into CEO after the deal. However he obtained none of that quantity.

The corporate made one other fascinating name that additional decreased the CEO-to-employee pay ratio: It figured that the typical ViacomCBS worker in 2019 made $104,791 — which it based mostly solely on the pay for CBS’ 15,511 employees. Leaving out the 10,631 Viacom staff who joined ViacomCBS on the identical time Bakish did makes a giant distinction. Viacom reported that its common worker made $39,110 in 2019, since about 30% had been low-paid contract employees.

ViacomCBS made one other necessary judgment name by basing the ratio on the estimated pay for Bakish as an alternative of on the compensation for Joseph Ianniello, who had been performing CEO for many of the yr — and will have undermined the acquisition if he needed.

Don’t weep for Ianniello. The manager walked away with $125.Four million. That features greater than $20 million in money and bonus ensures CBS gave him in April 2019 to stay to the tip of the yr. And 4 months later, when Viacom and CBS reached an settlement, Ianniello received almost $22 million in inventory that CBS described as “an inducement” to remain and “additional align his pursuits with these of our stockholders.”

When the deal closed in December, administrators signed him to a 15-month contract, with no lower in pay, to run CBS beneath Bakish. That paid off for the chief lower than two months later when he left the corporate, gathering top-dollar severance phrases, since ViacomCBS stated he wasn’t terminated for trigger.

The proxy says that administration is judged in half on its efforts to “construct a office tradition of dignity, transparency, respect, variety and inclusion.” The board beneath controlling shareholder Redstone stands out as the one one in the group we monitor that’s majority feminine.


NOTES: Many of the data in this story comes from the proxy statements and reviews that the Securities and Trade Fee requires publicly traded U.S. firms to file every year. Abroad firms equivalent to Sony, and privately held ones equivalent to MGM, don’t file and should not included in our tally. The SEC submitting necessities are designed to assist folks examine data from completely different firms. There are some caveats: Firms file reviews for his or her fiscal years. Most coincide with the calendar yr, however a number of don’t: Lionsgate’s fiscal yr ends in March, Fox’s ends in June and Disney’s ends in September. Our information is from their most up-to-date annual filings.

Our information in regards to the composition and ages of firm boards additionally displays the data included in the most recent proxy statements.

The SEC requires firms to reveal a median worker compensation determine, together with a ratio derived from that whole paid to the principal govt officer. Firms calculate the medians in another way, so that they aren’t comparable.

Though our record focuses on CEOs, for Fox we included govt chairman Rupert Murdoch as an alternative of CEO Lachlan Murdoch; Rupert was extensively seen as the corporate’s key decision-maker

David Lieberman is an affiliate professor in the graduate Media Administration program at The New Faculty.

Jiji Majiri Ugboma contributed to this report.

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